Legislating Crisis

Abstract

For the last several years, the congressional budget process has jumped from self-created crisis to self-created crisis. Debt limit, shutdown, sequester, potential withholding of congressional pay, and others beyond that — all of these crises coming in quick succession and requiring Congress to take action to avert a problem. There is a common element to each of these crises. In particular, Congress sets an undesirable event to occur at a later time — hence, prompting the possible crisis. This chapter represents an exploration of these devices, and a modest defense of some of them, despite the recent chaos in Washington. In particular, in legislating crisis, Congress may be addressing some of its other failings. These devices can serve constructive purposes by allowing Congress to not fully specify the way legislation will work in the future given the transaction costs involved in doing so; by allowing Congress to enforce the deals it makes; and, finally, by allowing Congress to better coordinate negotiations and, specifically, set timelines for deal-making. Thus, in some cases, the threat of crisis may be better than the alternative of none.